The Oakmark International Fund Report from David G. Herro and Michael J. Welsh, Portfolio Managers

THE VALUE OF A $10,000 INVESTMENT IN THE OAKMARK INTERNATIONAL FUND FROM ITS INCEPTION (9/30/92) TO PRESENT (9/30/99) COMPARED TO THE MSCI WORLD EX U.S. INDEX
9/30/99 NAV $13.95	Total Return Last 3 mos.	Average Annual Total Return* Through 9/30/99 From Fund Inception 9/30/92
The Oakmark International Fund	-7.1%	13.3%
MSCI World ex U.S. w/inc.**	4.3%	11.6%
MSCI EAFE w/inc**	4.4%	11.5%
Lipper International Fund Index**	3.4%	12.6%
* Total return includes change in share prices and in each case includes reinvestment of any dividends and capital gain distributions.
** Each of the three indexes or averages is an unmanaged group of stocks or funds whose composition is different from the Fund. The MSCI World ex U.S. Index includes 21 country sub-indexes. The MSCI EAFE Index refers to Europe, Asia and the Far East and includes 20 country sub-indexes. The Lipper International Fund Index includes 30 mutual funds that invest in securities whose primary markets are outside the United States. Past performance is no guarantee of future results.

FELLOW SHAREHOLDERS,

For fiscal year 1999, The Oakmark International Fund increased in value by 46.4%. This compares very favorably with the MSCI World ex U.S. Index which was up 31.3% and the Lipper International Fund Index which was up 27.6%. However, in the last quarter ending September 30, the Fund gave back 7.1% of the large gains achieved in the fiscal year. This compares to the quarterly return of the MSCI World ex U.S. Index which was up 4.3%.

PERFORMANCE ATTRIBUTION FOR QUARTER 4

There were a couple of reasons why we had an off quarter. One was the weakness in the Pacific Rim and Latin America. These areas were extremely over-sold going into the fourth quarter of 1998 and had recovered quite strongly until the third quarter of 1999. Fernz, a New Zealand-based agri-company, SK Telecom, a South Korean mobile phone company, Unibanco, a Brazilian bank, and Mandarin Oriental Hotels each cost your Fund between 1/2 and 1% of quarterly performance. From an investment perspective, though all these companies had rough calendar third quarters, we still think all are high quality, long-term investments with outstanding upside potential. In most cases, we have taken advantage of share price weakness to bolster our positions.

In the United Kingdom, one of our positions cost us almost 3% this past quarter. Somerfield, the UK's fifth largest grocer, dropped 56%. We think this company offers outstanding value selling at around 5x's earnings power and yielding over 10%. They have had some problems integrating an acquisition but their basic business is outperforming a very weak U.K. retail environment. The company is financially sound and has authorized a sizable stock buyback.

Being underweighted in Japan also cost the Fund. Japan achieved a U.S. dollar return of over 15% in the latest quarter, being the top rated developed market. We are still significantly underweighted in this market. Apart from Citizen Watch and Canon, we have found it difficult to find any "real" companies that are undervalued enough to warrant your investment dollars. Most large corporations in Japan still are unprofitable, wasteful capital allocators who care more about their creditors (who are hurting) and their suppliers (who are hurting) than their shareholders (who have been hurting for a decade).

PROSPECTS LOOK GREAT!

Looking forward, we believe that our shareholders will continue to be rewarded as prospects around the globe are rapidly improving for investors. Though the Pacific Rim has had a bit of a rally over the last 12 months, there is still huge potential as economies are recovering much faster than expected and real structural reform has occurred in most of Asia. As an example of this, we point to South Korea which continues to open its economy at a rate unthinkable only 18 months ago. Further, the big business groups known as "chaebols," which have had a strong hand in South Korea's collapse at the end of 1997, are under constant pressure to reform. Contrast the Kim administration's quick response in Korea to the paralysis of the Japanese powers that be. Though the Japanese economy has rebounded, it remains to be seen if it is for real. Little, if any, real structural reform has occurred.

In the United Kingdom, where The Oakmark International Fund has over 25% of its assets, companies are cheap, well run and based in the soundest, most capital-friendly European economy. Our holdings there have generally done well (with the exception of Somerfield, mentioned above) and continue to have bright prospects. We continue to find new names, as well, that fit our very strict criteria.

Continental Europe is also looking attractive again. Though company managements are nowhere near as shareholder-oriented as in the UK or the US, they are slowly changing. Further, share prices have lagged, offering some decent value, especially in places like Finland and Sweden. Metso, one of the Fund's largest holdings in one of the top two manufacturers of paper making machines in the world, is thoroughly restructuring its business to enhance profitability in all of its divisions, and has benefited by the bankruptcy of one of its largest competitors. We think it has a good chance of doubling in price based on the above!

IN CLOSING....

As large shareholders of this Fund, we too are very aware of the ups and downs of international investing. But, as we have said many times before, volatility breeds opportunity! We are committed to making lemonade out of lemons and welcome the opportunities that short-term traders drop on our laps. Rather than try to guess short-term price movements, changes in economic policy, election winners or the movements in exchange and/or interest rates, we would rather apply our research to something we are confident in: our ability to value a business. As suggested many times in the past, if one wants to gamble, one should try casinos. If a more certain outcome is desired, wager on the Green Bay Packers, for they will most likely win the next Super Bowl.

DAVID HERRO
Portfolio Manager
dherro@cs.com

MICHAEL WELSH
Portfolio Manager
102521.2142@compuserve.com
October 8, 1999

(a) Non-income producing security.

(b) Represents an American Depository Receipt.

(c) Represents a Global Depository Receipt.

(d) See footnote number five in the Notes to Financial Statements regarding transactions in affiliated issuers.

(e) At September 30, 1999, net unrealized depreciation of $58,302,773, for federal income tax purposes, consisted of gross unrealized appreciation of $96,229,261 and gross unrealized depreciation of $154,532,034.

(f) Includes portfolio and transaction hedges.